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pdkn
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Business Models

Jan 26, 2009 2:15 PM

Humm, Business models are something I normally leave to people who actually understand the value of money ;) However here are my thoughts.

Issues:

Multiuser development is seen as expensive

cost are normally handed down from agency to client

Clients are demanding and like to have options. i.e some have fixed costs and like paying up front.

Licensing is great for service provider, board members love it, but not always best for customer. As over time you could pay a LOT more than just being able to own something out right.

I would have though a lot of agencies already have FMS infrastructure?


I'd love to see software licensing look more like car insurance where it gets cheaper the longer you have it. The premise being setting out goals about how much adobe want to make, saying; 'we've got our pound of flesh out of this consumers application' lets make it cheaper and cheaper over time to run till their paying near cost.'
If you can have a strapline like: 'using this service you'd never pay more that you would if you hosted a FMS yourself' (who knows, hopefully with economy of scales, even cheaper?) Then you've got a very attractive proposition. and able to address the issue about long term users being a 'victim of there own success'. I'm sure with a bit of Advocacy you could figure out some equations of concurrent users, data transfer rates, age of app life..? else you'll just have to pay me for my Numerology skills ;) anyway, that's my 10 cents - or is that £1?
 
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  • Currently Being Moderated
    Jan 27, 2009 9:31 AM   in reply to pdkn

    Thank you for your thoughts and suggestions! You make a lot of interesting points, including your comments on competitive pricing relative to self-hosting FMS, passing economies of scale to agencies, and trade-off's of license fees vs. subscriptions. Rest assured that we are considering all of them as we work towards creating a pricing model.

    As you are already aware, most pricing models mirror cost structures incurred by companies. Your example of car insurance pricing maps very well to the price-cost alignment approach. In most cases, the longer you keep an insurance policy the better pricing you get. Part of reason behind better pricing is that there is no (or very minimal) incremental cost incurred by the insurance company to support you for each incremental year. The big constraint in all of this is that you need to maintain your driving record and any insurance claim will typically increase pricing. In fact with every year the insurance company lowers your price because they have a more accurate "risk profile" of you which maps to their cost structure in supporting you.

    But why am I mentioning all of this? The reason is that, unlike the insurance product, a platform-as-a-service offering has considerable on-going costs associated with managing, maintaining, and upgrading the infrastructure. Usage (rather than time) is a better metric for availing reduced pricing and as you mention we will be sharing with you cost synergies due to economies of scale.

    We hope that in most cases "Cocomo-powered" applications will be so compelling that usage will increase with time, which will in turn mean attractive pricing for agencies. Regardless, there are other alternatives available to agencies so any pricing we propose needs to be competitive and attractive for Adobe and our customers to be successful long-term.

     
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